Criteria Applicable to Hydrogen Projects

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Compliance with these criteria pertaining to green hydrogen production or green hydrogen derivative production projects¹ (outputs) is evaluated in the context of a departmental selection process respecting projects of 5 MW or more in keeping with the Act mainly to cap the indexation rate for Hydro-Québec domestic distribution rate prices and to further regulate the obligation to distribute electricity. Consequently, compliance with the criteria is a prerequisite and not a certainty concerning the possible grant of a block of energy from the Hydro-Québec system.

Generally speaking, the projects will be evaluated in relation to their impact on:

• decarbonization in Québec, especially as regards the level of sales in priority sectors, the anticipated reductions in greenhouse gases, and the level of certainty related to local consumption;
• power demand on the Hydro-Québec system, including their level of interruptibility and potential contribution to the system’s electrical capacity.²

Origin of the green hydrogen

The 2030 Québec Strategy on Green Hydrogen and Bioenergy calls for the government to prioritize renewable hydrogen production. Accordingly:

• green hydrogen must be produced in Québec using electricity from renewable sources, e.g., hydraulic, wind-generated, and solar-generated electricity;
• the green hydrogen produced cannot be mixed with another type of hydrogen or another gas been the production and consumption stages, except where it is used in synthetic fuel or green chemistry, which are called “derivatives” in this document, e.g., methanol, ammonia, and synthetic fuel;
• fatal hydrogen (coproduced or recovered industrial hydrogen) can be recovered and converted and will be exempt from the preceding paragraph.

Uses of green hydrogen

A. Priority sectors

For a project to be eligible, it must be demonstrated that the hydrogen or the derivative produced will be consumed in one of the following priority sectors:

• heavy transportation (road, rail, maritime, and air);
• industries such as metallurgy, refining, or green chemistry;
• applications related to energy storage and management strategies, such as storage, micronetworks, and off-the-grid power systems.

The injection of hydrogen into the gas network is not a priority sector. However, the recovery and conversion of the hydrogen that is generated as an industrial by-product (fatal hydrogen) may be accepted for this purpose.

B. Local use

In the case of projects where the Hydro-Québec system provides all or part of the electricity, the green hydrogen or its derivatives produced must be mainly consumed in Québec in the priority sectors.³

The objective of maximizing local consumption also applies to any fatal hydrogen recovery and conversion project that requires the granting by Hydro-Québec of a block of energy equivalent to or greater than 5 MW. On the other hand, the local consumption obligation does not apply to goods transformed by means of green hydrogen or its derivatives, such as green steel, or fertilizers.

The more significant the share of production devoted to local consumption, the greater the priority the projects will receive.

Interruptible projects

To be eligible, the project must be interruptible, i.e., it must provide for adherence to the Interruptible Electricity Options program or any other power demand management options.

The higher the shaving potential of the projects and the number of hours that exceeds the requirements stipulated in the programs and other power demand management options, the greater the priority they will receive.

Regional energy ecosystems

The Québec government will prioritize projects in the context of the regional energy ecosystems initiative, thereby promoting the local establishment of different facets of the value chain.

By supporting the emergence of regional energy ecosystems, the Québec government wishes to:

• strategically optimize the available renewable resources such as renewable electricity and residual biomass in the most environmentally and economically beneficial end uses;
• structure and enhance the security of supplies in short cycles to make economically available the volumes needed to roll out the projects;
• structure the value chain to facilitate the emergence of infrastructure and logistical networks of sufficient size to mutualize the uses, reduce production costs, and accelerate rollout.

In short, regional energy ecosystems combine green hydrogen production and its uses in the same region with a view to reducing costs and promoting short supply chains.

Note 1: Hydrogen can be converted into derivatives such as but not limited to ammonia, methanol, and  dimethyl ether (DME). Within the meaning of the application of the criteria, such derivatives are deemed equivalent to hydrogen.

Note 2: Reliance on electrolysis as an intelligent load or a project that generates electricity on the system.

Note 3: For the purposes of the analysis, a demonstration of the proportion of the green hydrogen or its derivatives consumed in Québec will be required.